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What is the potential of social scalability and Ethereum?
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Bitcoin is the first credibly neutral, internet-based native store of value. Credibly neutral means fair, unbiased, and unaffected by small groups. Credibly neutral is a social construct that is often based on technology, but ultimately based on many dynamic factors that influence people's trust.
Bitcoin’s trusted neutrality and utility are the primary reasons why the crypto industry has grown. Bitcoin has gone from a grassroots movement started by the pseudonymous founder Satoshi Nakamoto, with no insider ownership, no clear jurisdiction of origin, and a new product for anyone in the world to use, to a $1.7 trillion asset that is actively used as a store of value by some of the world’s largest governments and companies. The rules of the Bitcoin system remain difficult to change, which is a big reason for its continued adoption. Bitcoin’s growth has been amazing, but the community’s early cultural decision to focus solely on its monetary function has limited new Bitcoin developers and companies from using it for more than just money. Despite the claims of Bitcoin maximalists over the past 15 years, decentralized systems do have a huge opportunity to bring more freedom and progress to the world beyond money.
Social scalability is an important factor in Bitcoin's success, but the question any investor must ask in 2025 is, does social scalability really matter? Today, four of the top nine cryptocurrencies by total market cap are actually corporate tokens. The combined market cap of these four coins is over $312 billion. These tokens have strong narratives but have not achieved credible neutrality. They were launched by small teams in known jurisdictions, Silicon Valley and China, and allocated more than 50% of tokens to insiders. They have highly coordinated marketing campaigns, insiders involved in government lobbying, and many corporate-style top-down activities. These protocols have not yet proven themselves to be resilient, secure, and resistant to single points of failure. They make radical trade-offs for performance, sacrificing decentralization.
Similar to Bitcoin, Ethereum’s credible neutrality was there from the beginning. Ethereum didn’t have a fair launch like Bitcoin, but in the initial phase, only 9.9% of its token supply was allocated to insiders, and anyone in the world could easily own Ethereum tokens by sending Bitcoin to the ICO address, without any backroom deals with venture capital institutions, and no well-known people, companies, or countries were involved.
Ethereum was also originally a proof-of-work chain and used proof-of-work for the first 7 years, which ensured a more even distribution of tokens before moving to proof-of-stake. In the beginning, you didn’t need to own or buy Ethereum to participate in consensus and get rewards, you just had to contribute computing resources. Native proof-of-stake chains often have problems with early large holders dominating token rewards. This helped Ethereum have a large and diverse group of stakeholders in the early days, and has enabled a wider range of people to participate in consensus and get Ethereum rewards today. The founder of Ethereum is Vitalik Buterin. Critics of Ethereum will point to Vitalik’s leadership and say that the fact of having such a powerful and well-known founder undermines Ethereum’s credible neutrality. But those who have observed Vitalik’s leadership from the beginning with transparency and sincerity know that he has established a culture that emphasizes credible neutrality.
